Shanghai (ZXZC)- REECH AUTO has introduced a new shareholder backed by Henan provincial government, making it the first Chinese EV startup held by government-owned investor.

According to the business data platform Tianyancha, REECH AUTO's majority shareholder became a Henan-registered investment entity in early March, which currently holds 60% stake in the startup. Its advent made the registered capital surge to RMB3.366 billion from RMB1.347 billion. At the same time, the company's name also changed to REECH AUTO Technology Group Co.,Ltd. from REECH AUTO Technology (Shanghai) Co.,Ltd. Prior to the modification, the startup was wholly controlled by a Shenzhen-based investment management firm, which possesses the other 40% stake now.

(Photo source: REECH AUTO's WeChat account)

Founded in August 2016, REECH AUTO has not put any mass-produced model onto the market yet. The company disclosed in June 2018 it planned to roll out three platforms dubbed “CC”, “M”, and “S”, and launch a new model per half year. The first model was supposed to hit the market in last June, while the goal hasn't been realized as planned.

Besides, REECH AUTO signed strategic cooperation and joint manufacturing agreements with Changan Automobile on May 24, 2019. Under the agreements, both parties would co-manufacture the startup's first mass-produced model code-named M500 at Changan-Suzuki's second vehicle plant. Nevertheless, no update has been reported from then on.

In 2018, Wang Xiangyin, who assumed the startup's CEO then, said REECH AUTO was ready to obtain car-building qualification by working with contract manufacturer, making independent application to authorities, and acquiring stake of other carmakers.

As we know, car building is an extremely cash-burning business which is hard to sustain without solid capital support. Some analysts said REECH AUTO has largely lagged behind rivals in terms of financing progress, car manufacturing qualification, vehicle R&D and delivery. The situation is even worsened because of the NEV subsidy phase-out.